Event ID 552

Got a question, I keep seeing 2 accounts from 1am to 3am with the following info in the security of the event viewer.  My question is what exactly is this?

The user is "SYSTEM"
Computer = "servername"
Event Details:  Logon attempt using explicit credentials.
  Logged on user:
     Username:  SERVERNAME$
     Domain:      MYDOMAIN
     LogonID:     (0x0, 0x3E7)

  User whose credentials were used:
      Target user name:  first.last
      Target domain:       mydomain
      Target Logon GUID: {a very big number}

  Target server name:  localhost
  target server info:      localhost
  caller process ID:       2464
  Source network addr: 206.51.26.74
  Source port:               56055

So, is this someone who has hacked and got access to the first.last account?  The people I work with won't allow us to require complex passwords at all.

Thanks